Money Laundering Process Explained

The money laundering process explained from the offender’s side is easier to remember than any list of indicators.

The problem they have is simple. Proceeds of crime cannot be spent openly. Large cash purchases attract attention, banks ask questions, and unexplained wealth is itself evidence. The money exists and is unusable.

Everything in the process follows from that. They need a plausible explanation for where funds came from, distance between the funds and the offence, and eventually an asset or income stream that looks ordinary.

Once staff understand that, the indicators stop being a list to memorise. A transaction with no commercial logic, a customer who cannot explain their source of funds, or a structure that achieves nothing except distance all become obviously relevant.

Teach the motive and the red flags follow.

AUSTRAC publishes guidance for reporting entities. This is general information rather than legal advice, and obligations vary by state and territory.

See Sentrient’s AML/CTF course and learning management system.